We are studying a natural mechanism of resistance to retroviruses that occurs in mice and other species and involves virus envelope- cell receptor interactions. Transgenic mice that inherit a retroviral envelope (designated Fv4) are resistant to infection with retroviruses that use the same receptor. Most cells in these mice express the retroviral envelope which can interact with the receptor intracellularly and block its transport to the cell surface. Fv4 mice also secrete a soluble form of the envelope protein in serum which can bind to receptor on flu surface of other cells. While receptor blockade provides the simplest explanation for resistance, the immune system may also play a role since transgenic mice that express low levels of the envelope can be infected but recover from viremia with a strong humoral and cellular immune response, whereas control mice remain viremic and do not develop antibodies or cytotoxic T cells. In studying the immune response to envelope protein, we found that unimmunized transgenic mice have an expanded pool of cytotoxic lymphocytes specific for envelope, whereas these precursors are not detectable in non-transgenic mice. This result is interesting because transgenes usually induce tolerance rather than immunity. The transgenic mice do not develop autoimmune disease, however, which suggests that the activity of the cytotoxic lymphocyte precursors is tightly regulated. In related studies with HIV, we investigated the fate of the CD4 receptor for HIV in cells chronically expressing HIV envelope. In such cells CD4 is known to be rapidly degraded due to interaction with HIV envelope plus the small HIV Vpu gene product. We found that inhibitors of the proteasome blocked rapid degradation of CD4, and noted a sequence similarity between Vpu and another protein (IKB) whose degradation is mediated by the proteasome. These results raise the possibility that drugs that inhibit the proteasome might interfere with HIV infection.